ATX Estimated tax not matching with IRS

[Naveen Mohan from New York]

One of my client got letter from IRS saying that there is discrepancy between the estimated tax amount claimed and the amount per IRS records. I looked up his 2016 tax return and in that return I had scheduled $ 4,700 per quarter to be paid by ATX  direct debit. IRS letter is showing $ 4,600 per quarter.

I am curious that since it is direct debit shouldn't there be exact match between the ATX direct debit and IRS records and I do  not understand why IRS records are showing $ 100.00 per quarter less than what I had scheduled in ATX direct debit.

Thanks for your help.

Naveen Mohan

 

[Yardley CPA]

If your record shows you entered $4,700 into the ATX Program then something is obviously amiss.  I'd call ATX and see what they say from their end before contacting the IRS on this.  See if they can verify what you entered and what their system actually processed.  If there is a difference they should provide some type of explanation as to why.  This is good to know before connecting with the IRS.   One more thing, verify with the client that their bank shows only $4,600 taken instead of the $4,700.

[Abby Normal]

Sounds like you rounded to 100 and the tax changed by a small amount, so the estimates changed. Did you print a PDF of the return at the time you created the efile? Did you later recreate the efile? I've had this happen.

[Lee B]

I wouldn't reach any conclusions until I had my client check to see how much was debited from their checking account.

[SaraEA]

I have rarely found the IRS to be wrong about estimates, whether the client says he sent them all and didn't or says he didn't remember sending any but did.  I have a client whose installment agreement request was efiled with the return but was never instituted.  When I called IRS, they said they sent him three notices that they were having a problem setting up the direct debit, even gave me the dates the notices were mailed.  Whatever their weaknesses, they do seem to keep good records for individual accounts.  Definitely check with the client to confirm how much was debited.

[Abby Normal]

Definitely trust the IRS more than clients.

[Catherine]

1 hour ago, Abby Normal said:

Definitely trust the IRS more than clients.

Well generally yes, but if the bank statements disagree, then disagreeing with the IRS has to be done.  We had a case a while back where the IRS got a big estimated payment and applied it to that taxpayer but NOT to the year.  So a big credit was floating around at the same time they were dunning the tp for tax, penalty, and interest.  

Trust but verify?

[Max W]

This is why I no longer do EFT payments.  It gets you stuck in the middle and spending time on something you are doing gratis.

It is bad enough when an EFT is set up for an installment agreement and the client is constantly calling you to know when it is going to be set up and why haven't they gotten  the IRS letter confirming the date of withdrawal.

[Abby Normal]

I never even considered EFT payments as an option because it just seemed like so much could go wrong. Besides, clients can now schedule estimated payments directly with the IRS.

[Abby Normal]

1 hour ago, Catherine said:

Trust but verify?

That's why my eservices account is so important to me. When I get a new client I want to make sure everything is as it should be.

[SaraEA]

It cost $31 to set up a direct debit installment agreement online, $107 by mail, in person or phone.